Use the Information Below to Answer the Following Questions

question 38

Multiple Choice

Use the information below to answer the following questions:
Leslie Ltd has found an error in its revenue account: an invoice for $3000 was recorded as revenue in 2011 when it should have been recorded in 2012. The company’s income tax rate is 40% and there was no corresponding error in cost of goods sold.
-What is the effect of the error on the 2008 net profit?

• A) It is $3000 too high.
• B) It is $1800 too high.
• C) It is $1200 too high.
• D) It is $3000 too low.

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Definitions:

Operating Results

The financial outcomes of a company's core business activities, excluding non-operating revenues and expenses, reflecting its operational efficiency.

Required Rate of Return

The minimum annual percentage return an investor expects to earn when investing in a particular asset or project.

Sales Revenue

The income received by a company from its sales of goods or the provision of services.

Operating Assets

Assets that are used in the daily operations of a business to generate revenue, excluding investment and financial assets.